California’s Economic Solution

Jerry Taylor from the CATO Institute has stated that,” Developing California’s offshore oil reserves would represent a one trillion dollar mega steroid shot to the state’s economy.”


A 2013 study by Dr. Mark Schneipp, Director of the California Economic Forecast, evaluated two scenarios that could occur if California were to permanently lift the ban on offshore oil and gas production. Scenario A assumes development of all state tidelands reserves, and Scenario B assumes the combination of both state tidelands production and federal California OCS production. His analysis strongly demonstrates that permanently lifting the moratoria and allowing production in state and federal waters offshore California would produce broad economic benefits, including windfall fiscal benefits to the state’s budget.


Dr. Schneipp’s analysis shows peak production under Scenario B is 921 million barrels of oil in 2029. The economic benefits under Scenario B are as follows:


  • Personal income (adjusted for inflation) rises by $18+ billion per year during the peak years. Most of this in- come is reclaimed—it would have been exported to Saudi Arabia, Ecuador, and Iraq in exchange for oil.
  • $514 billion in new personal income generates $22 billion in personal income taxes. Income tax receipts flow directly into the California General Fund.
  • Royalties on the net wellhead value of oil and gas produced from state tidelands, yields revenue equal to $32 billion over the 2015 to 2060 time period
  • During the peak years of production (2025 to 2035) oil and gas royalties collected exceed $1 billion per year.
  • Total real property taxes would peak during the 2025 to 2037 time period when estimated collections would exceed $700 million per year.
  • Total collections over the life of the scenario are estimated at $23 billion.
  • More than 100,000 new jobs are created during the peak years.


Dr. Schneipp states that property tax revenues will contribute to schools, health centers, and infrastructure projects that will contribute substantially to the quality of life in not only coastal regions directly affected by the development, but statewide. Thousands of jobs and billions of dollars in new income are created as a result of new offshore oil and gas development in California more than 100,000 new jobs are created during the peak years.


Dr. Schneipp concludes that investment and development of oil and gas resources offshore California can increase economic growth with significant job creation accompanied by the windfall generation of wages, taxes, and other public revenues. This would both invigorate and stabilize economic growth while reducing budget volatility.